TMI Blog2012 (9) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... even when intention may be there, the penalty must be reasonable and cannot, in all cases, be fixed at 100% of the excise leviable – against revenue Provisions of Section 96ZO permitting the minimum penalty for delay in payment without any discretion and without having regard to extent and circumstances for delay are held to be ultra vires of the Act - CEA No. 3 of 2006 - - - Dated:- 26-4-2012 - Mr. Justice Deepak Gupta, Mr. Justice V.K. Ahuja, JJ. For the petitioner: Mr. Suneet Goel, Advocate. For the respondents: Mr. Sandeep Sharma, Assistant Solicitor General of India, with Ms. Anita Dogra, Central Government Standing Counsel. Justice Deepak Gupta, J.(Oral) These two cases are being disposed of by a common j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truck down to enforce fundamental rights under Articles 14, 19 and 21. The rules are beyond the scope of delegated legislation permitted under the Act. 10. Stand of the respondents on the other hand is that under Section 37(4) of the Act, the Central Government could make a rule providing for levy of penalty on contravention of rule with an intent to evade duty regarding removal of excisable goods, accounting for such goods, engaging in manufacture, production or storage of goods without registration. There being no compulsion to imply mens rea, minimum penalty was permissible and was neither arbitrary nor unreasonable and thus, there was no violation of fundamental rights nor the provision was beyond the scope of delegated legislation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of clearance of ingots and billets of non-alloy steel from his factory in the account current maintained by him under sub-rule (1) of Rule 173-G of the Central Excise Rules, 1944, subject to the condition that the total amount of duty liability shall be calculated and paid in the following manner I. Total amount of duty liability for the period from the 1st day of September, 1997 to the 31st day of March, 1998 (a) a manufacturer shall pay a total amount calculated at the rate of Rs 750 per metric tonne on capacity of production of his factory for the period from the 1st day of September, 1997 to the 31st day of March, 1998, as determined under the Induction Furnace Annual Capacity Determination Rules, 1997. This amount shall be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther with on-account amount paid by the manufacturer, if any, during the financial year shall be adjusted towards the total amount of duty liability; (c) if a manufacturer fails to pay the total amount of duty payable under clause (a) by the 31st day of March, of the relevant financial year, he shall be liable to, (i) pay the outstanding amount of duty (that is the amount of duty which has not been paid by the 31st day of March of the relevant financial year) along with interest at the rate of eighteen per cent per annum on such outstanding amount, calculated for the period from the 1st day of April of the immediately succeeding financial year till the date of actual payment of the whole of outstanding amount; and (ii) a penalty equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st day of such month, as the case may be, he shall be liable to i) Pay the outstanding amount of duty alongwith interest thereon at the rate of eighteen per cent per annum calculated for the period from the 16th day of such month or the 1st day of next month, as the case may be, till the date of actual payment of the outstanding amount and ii) a penalty equal to such outstanding amount of duty or five thousand rupees, whichever is greater. 5. As per Section 37 (4) (d), if an assessee contravenes the provisions of any rule with intent to evade payment of duty, then the goods can be confiscated and the assessee liable to pay penalty not exceeding the duty leviable on such goods or two thousand rupees, whichever is greater. 6. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the impugned provision to the extent of providing for mandatory minimum penalty without any mens rea and without any element of discretion is excessive and unreasonable restriction on fundamental rights and is arbitrary. Moreover, exercise of such power by way of subordinate legislation is not permissible when rule making authority for levying penalty is limited to default with intent to evade duty . 8. We are in agreement with the aforesaid judgment. We feel that when Section 37, which is the rule making power, is clear that penalty can be imposed only when the assessee is guilty of intending to evade the payment of duty, the penalty cannot be imposed without such intention. Furthermore, even when intention may be there, the penalty m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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